LeEco is 'over-extended' and running out of cash: CEO Jia Yueting

Chinese tech company LeEco is running out of cash to support its sprawling business expansion, as revealed in a letter sent by CEO Jia Yueting to the company's employees. LeEco recently held a major launch event in San Francisco to celebrate their expansion into the U.S. market.

As reported by Bloomberg Technology, Yueting admitted the major Chinese technology company had 'over-extended' itself in its strategy to expand into new markets, including a big push into the U.S.:

In a lengthy letter to employees, company co-founder Jia Yueting apologized to shareholders and pledged to slash his income to 1 yuan (15 cents), slow LeEco's madcap pace of expansion, and move the company toward a more moderate phase of growth.

LeEco is the umbrella holding company for a sprawling family of businesses that includes sports media, automobiles, smartphones and TVs. The company known for its LeTV streaming service has aggressively pursued funding and placed bets on new ventures, from an electric car plant in Nevada to a $2 billion acquisition of California TV maker Vizio Inc.

"No company has had such an experience, a simultaneous time in ice and fire," Jia wrote in a letter, obtained by Bloomberg News, describing LeEco's rise and subsequent issues. "We blindly sped ahead, and our cash demand ballooned. We got over-extended in our global strategy. At the same time, our capital and resources were in fact limited."

I never heard of this outfit until Android Central covered their recent event. I then looked them up. I hadn't even heard that they bought Vizio.

I found out the hard way that just because one lists all the bells and whistles on a smart phone doesn't mean much. I bought a top-of-the-line Droid Turbo 2 that didn't measure up to other flagships -- even though it had all the right specs.

Android phones and TV's are super low margin businesses. Most companies in both those industries lose money.

And I couldn't fathom how a Netflix type business could be that profitable in China. The Chinese are notorious for pirating (not paying) for movies and music. Especially western content.

I imagine they are done. Unless they have connections to the Chinese treasury.

And what data do you have to support the notion about Chinese pirating media? A lot of Westerners pirated until Netflix came along since that's much more convenient, and I'd imagine it'd be similar in China.

And the Chinese govt has always turned a blind away from pirating western content -- just ask Microsoft about Windows and Office. Not to mention all of the pirated DVD movies that are openly sold (at least they were last time I checked).

And sure there was pirating in the U.S. before Netflix -- there still is -- but whenever the media companies go to court, prosecutors successfully win convictions. And U.S. based sites and ISPs in America always have a watchful eye out for excessive pirating as they fear being held liable.

How on earth did the newly arrive in the US and end up in financial trouble so fast? Like inside of a week it seems? I know there is more to their business than the US market, but it seems a bit rapid to fall into debt basically overnight. I wish them the best I guess.

CEOs cutting their salary is largely symbolic. Or they may do it as a condition to raise more cash. Or before they plan a massive layoff or propose others take a salary cut. In any case, if the CEO needed the salary to pay for his day-to-day expenses they wouldn't do it.

And who knows. CEO's have been knows to run all kinds of personal expenses through their businesses (including jets, boats, houses, etc.) so who knows if the salary is really being cut.

My guess is the CEO has other wealth. And China accounting can be funny, as he may have "skimmed" a small fortune already in the form of cash he raised for this enterprise.

One can probably surmise they will be out of business soon. Or folded into another enterprise. I suspect the "coming to America event" was done with intent to raise additional $$$$ and when then that didn't work this announcement came out.

And I believe Samsung, like all of the large Korean companies, is largely a family owned business.

His income well assets rather, I am sure he isn't hurting for $ thus he can afford to ' lower ' his salary to 1 yuan LOL.....I am sure once sales roll in he will get a 'bonus' - corp greed is sickening

The hardware on these phones seems quite good. I bought the pro 3 and it's well put together. Quality has been pretty good for some time in China. The phone's software isn't great and takes some getting used to but it's nothing most cell phone enthusiasts can't get around. My guess with an unlocked bootloader we'll find some modest support on xda.

I never bought this phone thinking is very nougat. I bought it for 300, sell for 200 in 6 months and buy the next interesting thing like maybe Oneplus 4.

This type of phone isn't yet mass appeal ready. This is for enthusiasts who want to take chances for cheap to get high specs.